RIM's BBX Plans: Can They Reverse BlackBerry's Fortunes?

By Nicholas Kolakowski |
Posted 2011-10-22

For months, Research In Motion executives have done their
absolute best to convince media and analysts that the company's upcoming round
of "superphones" will spare the Canadian company from the market-share doldrums
by offering a viable competitor to the Apple iOS and Google Android devices
currently dominating the market.

Those superphones (along with RIM's tablets) will run BBX, a
QNX-based operating system, in place of a new version of the long-running
BlackBerry OS. Thus far, RIM has offered precious few details about BlackBerry
BBX's user interface or release date. But that aside, the transition raises
some thorny issues for the company, including whether legacy applications will
port to the new platform.

According to an Oct. 18 statement released by RIM, BBX will
apparently "support applications developed using any of the tools available
today for the BlackBerry PlayBook ... including native SDK, Adobe AIR/Flash and
WebWorks/HTML5, as well as the BlackBerry Runtime for Android Apps."

That suggests BBX will interoperate with RIM's PlayBook
(which currently runs a QNX-based operating system), but it's an open question
whether those customers currently buying BlackBerry devices loaded with
BlackBerry 7 OS-or those who already own older BlackBerry hardware-will have
the ability to upgrade to the new operating system once it rolls out.

The other question is whether, by allowing Android
applications onto its devices, RIM will end up alienating those developers who
devoted much time and effort to developing BlackBerry apps. RIM needs both developers
and its current base of customers to succeed in its latest endeavor.

The consequences of failure are dire. According to a new
study from research firm Enterprise Management Associates, some 30 percent of
Blackberry users in large enterprises "expect to migrate to a different
platform within the next year." Lack of user satisfaction topped the survey
respondents' reason for jumping.

"We expected to see some market share loss by RIM, but these
results were far more dramatic than we could have anticipated," Steve Brasen,
EMA's managing research director, wrote in an Oct. 19 statement. "Both
enterprises and employees indicated they were broadly abandoning BlackBerry
devise for primarily Android and iOS platforms-and this data was collected
before the recent BlackBerry service failures, which can be expected to even
further accelerate migration."

Research firm Nielsen estimated RIM's share of the U.S.
smartphone market at 18 percent through August, behind both Google Android (43
percent) and Apple iOS (28 percent) but well ahead of Microsoft (8 percent).
However, Microsoft is pouring millions of dollars and striking partnerships
left and right to make Windows Phone the smartphone space's third major
ecosystem, and both Android and iOS have made significant inroads within the
business community over the past several quarters.

During its Sept. 15 earnings call, RIM reported revenues of
$4.2 billion for the second quarter of its fiscal 2012, a 15 percent decline
from the $4.9 billion it earned during the previous quarter. Those numbers led
to analyst pessimism and even a well-publicized call, from Canadian merchant
bank (and RIM shareholder) Jaguar Financial Corp, for a RIM executive shakeup.
Those executives have roundly blamed soft sales of the aging BlackBerry line
for at least some of that financial weakness, while expressing hope that new
smartphones with BlackBerry 7 OS can hold the market-share line until the BBX
ones arrive.

That means RIM will need to make a hard case for BBX devices
over, say, Apple's iPhone or higher-end Android devices like Motorola's
upcoming Droid Razr. If none of the current BlackBerry devices will support the
new operating system, and if legacy applications won't run on BBX devices, then
the case becomes that much harder. In many ways, RIM is facing a similar
situation as Nokia, which abandoned its homegrown operating systems (such as
Symbian) in favor of Windows Phone, and now needs to convince users to purchase
a whole new generation of devices.

It takes considerable skill and luck for any company to
regain the initiative in the face of significant market headwinds. Some
succeed. RIM's executives doubtlessly hope their company will be among
them.